Plan requires registration of IBRs that materially impact the bulk power system that is crucial to the electrical grid

On May 18, 2023, the Federal Energy Regulatory Commission ("FERC") took one more step in its ongoing efforts to enhance and protect the reliability of the bulk power system by approving a work plan submitted by the North American Electric Reliability Corporation ("NERC").[1] Though the approval order is a major procedural step toward enhancing reliability, some stakeholders may say it is not enough. As reported in a previous post, FERC required NERC to submit a work plan to register entities that own or operate inverter-based resources ("IBRs") that have, in the aggregate, a material impact on the reliability of the bulk power system.[2] Consistent with other IBR proceedings, FERC defines IBRs to include solar photovoltaic, wind, fuel cell, and battery storage resources powering electronic devices that change direct current power produced by these resources to alternating current power to be transmitted on the bulk power system.

Identification and Registration

In the 2022 IBR Registration Order, FERC required NERC to file a work plan to identify and register unregistered IBRs that, in the aggregate, have a material impact on the reliable operation of the bulk power system but are not currently required to be registered with NERC.[3] NERC's work plan proposes to revise its Rules of Procedure and Registry Criteria to create a new registered function, called Generator Owner IBRs ("GO-IBRs"), made up of IBRs that: (i) have aggregate nameplate capacity of 20 to 75 MVA interconnected at a voltage of at least 100 kV; and (ii) have aggregate nameplate capacity of at least 20 MVA interconnected at a voltage less than 100 kV.[4] NERC asserts that these registration criteria will result in approximately 98% of IBRs connected to the bulk power system being subject to applicable NERC Reliability Standards.[5]

NERC plans to register IBRs subject to the new registration requirements through changes to NERC's registration program, though it states that it will continue to examine whether other revisions, such as changes to the definition of "Bulk Electric System," are appropriate.[6]

Distribution-Connected IBRs Excluded

Both the IBR Registration Order and NERC's work plan excluded a requirement to consider the registration of distribution-connected IBRs, including Distributed Energy Resources (the latter referred to as "IBR-DERs").[7] FERC declined commenters' requests for clarification on this limitation, finding that NERC's collaboration with stakeholders to revise its Rules of Procedure related to registration is the appropriate forum for determining details related to NERC's proposed registration threshold.[8] Hence, FERC did not require NERC to further clarify whether its work plan was intended to register facilities used solely in local distribution.[9]

Implementation Milestones

FERC also agreed with NERC's three-year timeline for developing the required registration process.[10] From the issuance of the Work Plan Order on May 18, 2023, NERC's milestones are to: (i) modify its registration processes within 12 months; (ii) identify unregistered IBR owners and operators meeting the new registration criteria within 24 months; and (iii) ensure IBR owners and operators are registered and required to comply with applicable Reliability Standards within 36 months.[11]

Undue Discrimination Concerns

Commenters raised concerns that NERC's plan would put IBRs at a competitive disadvantage against conventional generation by proposing a registration requirement applicable only to IBRs.[12] FERC found the concerns speculative and premature, given that the commenters offered no evidence of any such competitive disadvantage and that NERC has committed to conduct outreach to entities not traditionally included on its compliance registry and to inform all stakeholders.[13] FERC encouraged entities to use the NERC stakeholder process to raise any concerns of competitive disadvantage.

Implications

While many will welcome FERC's approval of NERC's IBR registration work plan, concerns remain over the long three-year timeline and potential further regulatory delay deferring the enhancement of bulk power system reliability. FERC itself recognized the possibility that it could take issue with the substance or direction of the registration approach eventually proposed by NERC.[14] FERC made it clear in the Work Plan Order that it was not addressing the potential registration approach, scope, and detail of NERC's ultimate registration plan.[15] Owners and operators of IBRs that are potentially subject to registration should monitor stakeholder proceedings and actively participate to improve the chances that NERC's registration protocol ultimately addresses their interests and passes muster with FERC.

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